Exchange-Traded Art: Can We All (Co-)Own a Picasso Now?

The initiators of ARTEX want to revolutionize the art market through this new entryway. The market previously had only been accessible to wealthy individuals capable of coming up with enough capital to either purchase a renowned work of art outright or to acquire shares in an art investment fund. ARTEX aims to create a new asset class accessible now to millions of people. Through exchange listings on ARTEX and by splitting the price of artworks into shares with an issue price of 100 euro, works of art will be fractionalized (see box) and will come into the hands of shareholders this way. Since retail investors will now also be able to acquire shares in works of art and profit from their price performance in the future, many are calling this the democratization of the art trading market.

Works of art spanning from the Renaissance to the twentieth century will trade on ARTEX. A joint stock corporation will be founded for each artwork to be listed on ARTEX. Its shares will then enter trading on ARTEX via an initial public offering (IPO). The maiden IPO is slated to take place at the end of the second quarter of 2023, and artworks with a combined value of one billion euros will reportedly go public on ARTEX in subsequent quarters.

ARTEX is headquartered in Liechtenstein. Its license to operate a multilateral trading facility (MTF) was issued by the Financial Market Authority of Liechtenstein (FMA) in conformity with the European Markets in Financial Instruments Directive (MiFID II).

The price of each work of art is fractionalized so that each share goes onto the market at an issue price of 100 euro. The fractionalization into 100-euro shares is carried out through a structured process that precedes the IPO. When a work of art is to be listed on ARTEX, it first undergoes a rigorous due diligence review to verify its authenticity and to determine its value. Its price is than set and the artwork is then acquired by a Luxembourg-based joint stock company founded specifically for this purpose. That company then goes public at a stock issue price of 100 euro per share. After the IPO, the interaction of supply and demand determines the future evolution of the share price on ARTEX, just as it does on any other securities exchange.

The art market is generally considered to be relatively stable in terms of retaining value, has exhibited resistance against inflationary trends in the past, and performs in a manner that is largely uncorrelated with prices and sentiment on equity markets. Art thus gets grouped in with alternative asset classes, and blending it into an investment portfolio can diversify its risk profile. Moreover, the international art market is constantly growing. The aggregate value of tradable art worldwide is estimated to amount to 3.2 trillion US dollars at present.

The risk primarily depends on the artist and the specific work of art concerned. The art market is a complex and opaque market that is subject to societal change, fashion currents, and other forces. Investments in art therefore always entail risk. However, this risk decreases when the artist is a luminary like Pablo Picasso or Gerhard Richter, for example. It’s hard to imagine that their works could drastically lose value. They thus are virtually the blue chips of the art market.

Former investment banker and hedge fund manager Yassir Benjelloun-Touimi founded ARTEX together with Prince Wenceslas of Liechtenstein, who current chairs the company’s board of directors.

The initiators of the exchange consider it important for the artworks that are listed and traded on ARTEX to be accessible to the public as cultural heritage. Most of the works therefore will hang in public museums to be marveled at while their shares trade on ARTEX.

According to information from ARTEX, shareholders do not bear any ongoing costs for items such as the administration of the company, the safekeeping of artworks, or insurance premiums.